You are auditing the sales order processing department at Joe Henderson \& Co., a highend book publisher. You are attempting to determine whether you can rely on the control procedure that stipulates that all sales invoices will bear the prices from a master price list.

a. Find the sample size necessary to determine (with a 5 percent acceptable risk of overreliance) whether you can rely on the prices for a population of 800 sales invoices. Last year's deviation was 0.75 percent, and you are willing to tolerate up to 4 percent of the invoices as incorrectly priced before you conclude that the pricing process is poorly controlled.

b. Now assume that you can make do with a 10 percent acceptable risk of overreliance, but you assume that the company is not assigning prices to the invoices as well as it did last year, so you increase the expected deviation rate to 1.25 . What sample size would you draw now?

c. Suppose that you found four deviations in the sample you took based on your calculations from Part

a. Can you conclude that the pricing process is reliable? Why or why not?

d. Suppose you had already chosen a random sample of invoices to test another attribute. Could you use those same items to test the pricing attribute? Under what circumstances could you use them? Under what circumstances should you select a new sample?